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I'm a new Mac user, and even newer to video projects. I have an iMac.
I have a project saved on my desktop as an .avi format. When I click on it to play it, I get a message that it cannot be opened because "the file is not a movie file"

1. How is this? I saved it from iMovie to my desktop. Honestly, I'm not even sure how I did this in the first place. I cannot seem to repeat the process. All subsequent attempts are .m4v files.

2. How can I export the project to a disc in DV format? Or even better, export it back to my camera (MiniDV)?

If you created an AVI file using iMovie then you must have used the advanced export mode. See my iMovie Export Guide about that. I don't understand how you could have created an AVI file and can't play it back. You could try downloading Perian for Flip4Mac to solve that issue.

Using the advanced export feature will let you create a DV file. If you want to create a DVD you need to get your creation to iDVD. That depends on which iMovie version you have. I don't have a camera with me, so I'm not sure about getting the content back onto a camera.